Tuesday, June 8, 2010

Soccernomics: Crests and the Economic Value of a Good Logo

Just because I have posted on this before I thought I had better follow-up, though even I am weary of too much soccer despite the worlds biggest sporting event being only a few days off.

The Vancouver Whitecaps have released their new MLS crest (as seen above). Pretty boring in my opinion but, and more importantly, inoffensive. [See my earlier post on MLS crests if you care to witness the horrors of earlier logos] Interesting that they are going for the FC label - seems to be de rigueur these days. I have no problem with it - but how about someone bucking the trend and going all American with an SC?

Meanwhile the Timbers will be unveiling their new crest on Saturday at Director Park during the halftime interval of the USA - England match being shown on a big screen there. To get people worked up into logo frenzy thay have released a series of four teaser videos with clues to the new crest. In them, they have revealed that the new crest will: one, be round; two, have an axe that 'escapes' the confines of the circle; three, have three chevrons; four, be dark green and light green. So there you go.

Everything fine as far as it goes, but the light green makes me nervous. "Loud and bold" according to the Timbers. Sounds like it is to replace the yellow so I imagine will be a bit yellow-green, but hopefully nothing neon-ish like the Sounders' nightmarish green which appears to be a way to keep the colors close to the Seahawks and to their current sponsor, XBOX.

But it got me wondering, just how big an economic gamble is this?

Well, fortunately the Sports Business Journal has a recent article on the latest addition to the MLS, the Philadelphia Union (new crest: OEB approved).

Seattle Sounders FC may not be an expansion team any more, but they still lead MLS in merchandise sales.

The Sounders’ continued success combined with strong sales of Philadelphia Union merchandise have combined to drive double-digit percentage increases in MLS merchandise sales this year. Sell-throughs of MLS merchandise at large retail partners such as Dick’s Sporting Goods have been strong, allowing MLS to set a record for the first quarter for merchandise sales, said Stu Crystal, MLS vice president of consumer products.

...

The club has already sold seven figures worth of merchandise and is expected to hit eight figures by the end of the year. It is enjoying 90 percent sell-through on core items such as replica jerseys and scarves.

“It’s been an incredible shot in the arm for our business,” Crystal said. “There’s a lot of competition with other teams in Philadelphia, but fans have been gobbling up their merchandise.”

Crystal credited the team’s logo as being a major factor in sales. [Emphasis mine] The club incorporated a rattlesnake from the famed “Don’t Tread on Me” flag into its shield. It was an image that its largest supporters group, the Sons of Ben, had used in their campaign to get an MLS franchise.
“The merchandise … is some of the hottest-selling gear for the MLS right now,” said Steve Sterhan, soccer category manager for Adidas America. “We are only five weeks into the season, and retailers are reporting double-digit sell-though.”

So the answer is that it is pretty big business in general, but still how much does a good logo matter over a bad logo? Or in economics terms, what is the marginal value of a good logo? Crystal suggests it matters a lot, but you can't really test these things. Portland is a smaller market than Philly but has less sports competition, so I would imagine similar sales. Let's go with the eight digit floor of $10 million. If a good logo increases that by 10% we are talking real money and that is only in the first year - the present discounted marginal value of a good logo could easily reach eight figures itself. Hmmm...let's hope Merritt and the rest of the Timbers management chose wisely.

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